Claims Made vs Occurrence

What is a “claims-made” policy?

A claims-made policy covers a Dentist for any covered claim provided it meets two criteria:

  • The policy is in force when the claim is made and reported to the insurer. When coverage expires, the policyholder can purchase an extended reporting period (aka “tail”) to cover claims arising from past services.
  • Coverage has been in force from before the time the incident occurred (after the retroactive date).

What is an Occurrence policy?

An occurrence policy protects you from any incident occurring while the policy is in force. The policy then covers those incidents forever and you are not required to purchase an extended reporting period when the policy expires.

Which coverage is better, claims-made or occurrence?

Most experts agree that the right coverage for a Dentist depends on individual circumstances. Both types of policies will cover “Professional Services.” Both types of policies are issued by the same insurance company, offer the same policy limits and discounts, have the same endorsements, and provide defense outside the limits. Some advantages to consider:

  • The claims-made policy offers greater flexibility, because the prior policy is the one covering your past (prior acts). Thus, you can increase your limits or buy a new coverage that was not available when you started your policy. Since the policy in force at the time of the claim responds (not the policy you had when you provided the service), you get the benefit of the enhanced coverage. Claims-made coverage is portable. You can take the coverage from one insurance company to another.
  • The advantage to an occurrence policy is its permanence. The period of time of coverage under an occurrence policy is protected forever by the policy you had that year. You do not need to renew or buy the tail when you the policy expires.

What is the difference in cost between a claims-made policy and an occurrence policy?

An occurrence policy is about three times expensive as a no prior acts claims made policy. However, when you add the cost of longest extended reporting period an occurrence policy is about 10% more expensive than a no prior acts claims made policy.